Great companies continue to increase their dividends during a downturn. To find these great companies, you will need to focus on more than just yield. You need to consider the stock's Free Cash Flow Payout. Free Cash Flow is Operating Cash Flow less normal capital expenditures (capital expenditures is usually the first line in the investing section). For a business to remain viable, it must replace capital assets when they wear out. That's why I prefer Free Cash Flow over Operating Cash Flow. Free Cash Flow tells you how much cash the company has left over after paying the normal operating expenses. This is the cash that is used to pay for acquisitions, debt obligations, and yes, dividends!
The formula for Free Cash Flow Payout is simply the Annual Dividend Per Share divided by Free Cash Flow Per Share. I like to see a percentage of 70% or less. The 70% is somewhat higher than many people look for with a traditional payout ratio. I am comfortable with the higher number since we are talking about real cash generated from running the business vs. accounting earnings that may or may not be there. This week I screened my database for select stocks with: - A free cash flow payout below 45% - A dividend yield over 3% The results are presented below...
Source: Dividend Growth Stocks
Related Articles:
- The Most Important Thing To Consider When Selecting A Dividend Stock
- 5 Healthcare Stocks With Growing Dividends Yielding In Excess of 2%
- 3 Powerful Concepts for Compounding Wealth with Dividend Stocks
- Why We Are Dividend Growth Investors
- 5 Higher Yielding, Lower Risk Stocks To Perk Up Your Dividend Income
________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
Each of these high-yield dividend stocks has a dividend yield exceeding 6.5%. That’s is a very high dividend yield few stocks have. In addit...
-
Because their financials must support a monthly dividend payment, the companies in this space are stable by nature — their operations are st...
-
While there are a number of factors responsible for pushing the stock market lower, the spread of COVID-19 looks to be the match that lit th...
-
Dividend payments are, by nature, a conservative strategy for companies to use, and as a rule of thumb the more conservative companies are l...
-
This stock has plunged by 50%. Only two mortgage REIT analysts warned investors away from shares before it happened. The market overreacted....
-
So what should investors do amid the panic? They could do worse than own top dividend stocks. The recent stock market crash has turned some ...
-
So if the economy does putter out, what should you do with your money? You could do worse than bet on recession-proof dividend stocks. That ...
-
As veteran traders will attest, though, nothing lasts forever. It might not be a bad idea to start adding exposure to the market's lagga...
-
In a soaring market, a few percentages of dividends may not seem like much. Over the past few months, the Dow Jones Industrial Average, the ...
-
For most investors, this is not a time to panic. Rather than take a flight to safety, now is a time to take a flight to quality. And when in...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.